Luke Johnson gambles on bingo firm

Luke Johnson’s investment vehicle Risk Capital Partners will attempt a consolidation play in the UK bingo sector having acquired Mayfair Bingo for an undisclosed sum.

Risk Capital Partners (RCP), the private equity firm run by entrepreneur Luke Johnson along with Mark Farrer-Brown and Ben Redmond, has acquired Mayfair Bingo for an undisclosed sum from former owner Brian Fraser

RCP is backing a management buy-in team led by chief executive Simon Hannah, who has worked in the bingo sector for 20 years and was previously head of business development at Mecca, the gaming division of Rank. Paul Viner, the former finance director of Tottenham Hotspur football club, becomes finance director.

Mayfair Bingo owns six sites operating under the Riva brand, which have a combined 200,000 square feet of gaming floors used for traditional bingo and, increasingly, gaming machines.

Farrer-Brown told PrivateEquityOnline the rationale for the deal was the opportunity to back experienced management in consolidating a fragmented industry. “Outside Gala and Mecca [which account for around 40 percent of sites in the UK and 70 percent of player admissions] there is a big gap in the market. We think we can exploit that through a sophisticated approach: Simon Hannah has interesting ideas and a different vision from others in the industry,” he said.

Farrer-Brown added that Mayfair would reach “critical mass” when it owned around 20 sites, but “that is not where the ambition stops”. He said it would be “looking for acquisitions straightaway” alongside its banking partner Royal Bank of Scotland Corporate & Structured Finance, which provided acquisition funding for the Mayfair takeover.

Ongoing deregulation in the gaming sector has been a major attraction for private equity firms, including those that have backed three successive buyouts at Gala Bingo. However, Farrer-Brown points out that such things as allowing the installation of a greater number of gaming machines in clubs as well as easing restrictions on the granting of licences for new sites make the sector more competitive.

RCP was launched in 2001 by Johnson, former PizzaExpress boss and current chairman of the Belgo restaurant chain and Channel 4; Farrer-Brown, who left venture capital firm Elderstreet Investments in 1999 to work on projects with Johnson; and Redmond, formerly at Grant Thornton Corporate Finance.

Last year, RCP submitted a £263 million offer for PizzaExpress, but was unsuccessful and the business was subsequently sold to private equity firms TDR Capital and Capricorn Ventures. RCP invests private capital from undisclosed sources on a deal-by-deal basis.